Rockford, Freeport hospital prices vary widely, data shows

ROCKFORD — Sticker shock sets in quickly reading hospital charge data released online in May for the first time by the federal government, reflecting the average charges for 100 of the most common Medicare inpatient procedures at U.S. hospitals.

ROCKFORD — A heart attack with complications can cost $20,071 to $42,556 to treat at hospitals between Freeport and Rockford.

Serious small and large bowel procedures — like surgery for the colon and intestines — with major complications can range from $100,507 to $170,015.

Sticker shock sets in quickly reading hospital charge data released online in May for the first time by the federal government, reflecting the average charges for 100 of the most common Medicare inpatient procedures at U.S. hospitals.

The feds did the data dump to help the public better understand hospital pricing in light of national health care reform and other efforts to trim unsustainable health care costs.

But hospital officials say the data can confuse consumers because price listings aren’t ultimately what patients will pay after government programs like Medicare and Medicaid and private insurers negotiate discounts on their behalf.

“There’s a buzz of demand for price information,” said Chapin White, a senior health researcher for the Washington-based, nonpartisan Center for Studying Health System Change. “There’s also an undercurrent of outrage and almost panic about health care costs, so (the Centers for Medicare & Medicaid Services) threw this big pile of data into this turbulent sea even though the data don’t really relate to prices hardly anybody pays.”

The data show that hospitals in Rockford and Freeport vary greatly on pricing — procedures are priced within a few hundreds of dollars in some cases, but the differences can range from $30,000 to $40,000 in other cases.

FHN Memorial Hospital in Freeport, which declined to comment for this story, most often had the lowest prices. Rockford’s SwedishAmerican Hospital has the highest prices for certain procedures, in part because the hospital treats more older and low-income patients, and the hospital is reimbursed more money for that.

“The price that they publish is our list price, our gross prices, and those are largely irrelevant,” said Don Haring, chief financial officer for SwedishAmerican Health System. “Most payers don’t pay those charges. Medicare and Medicaid dictate what price they pay, and individual managed-care contracts are negotiated for much less than that list price.

“Health care is different than business and industry where things are standardized. We’re not making widgets. Each patient has a unique severity.”

Hospital officials have said for years that government payers like Medicare and Medicaid don’t cover their full costs, and the numbers prove that, too. SwedishAmerican, for example, charged an average of $31,738 in 2011 — the most recent data year available — to treat a heart attack with complications but was only paid $7,818 by Medicare.

Chapin cited people who seek care outside of their insurance networks and uninsured patients as examples of who can be hit with the biggest hospital bills, though Illinois does offer added protections for uninsured patients.

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He characterized the CMS prices as “the hospitals’ opening bids to get as much from insurers or patients for services.”

“They are meaningful,” Chapin said of the prices. “If nobody ever pays those charges, why have the prices on the books if you weren’t hoping that somebody at some point will pay those charges?

“To me, the charge data are a really strong reminder to get health insurance coverage. If you have any income and assets and you go into the hospital without any insurance, that could be the bill you’re going to get.”

All three Rockford hospitals said patients do request price estimates for care — not every day, but a few times a week. Haring expects to see more of those requests come 2014 when the individual mandate to buy health insurance under the Affordable Care Act kicks in and people are more responsible for their health care spending.

The Illinois Hospital Association said in a statement about the price data that hospital charges can vary based on factors like the hospital’s local community, differences in services provided (like trauma, neonatal intensive care units and burn units), different populations served and a wide mix of public and private payers.

Local hospital officials all noted that individual medical care is complex — certain patients are sicker than others, and those patients sometimes wait until their sickest points to seek care.

Henry Seybold, Rockford Health System’s chief financial officer and senior vice president, said the pricing numbers shouldn’t be considered in isolation. Rockford Memorial Hospital typically falls in the middle with pricing compared to Rockford’s other two hospitals, but there are exceptions.

“It’s important to recognize that the reason charges are the way they are is that not all payers, i.e. government payers, come close to covering our costs even though all three of us (in Rockford) are not-for-profit,” Seybold said. “We need to cover our costs and have extra to buy technology, give raises, increase supplies.”

Rockford and Freeport hospitals also provided nearly $30 million in charity care in 2011, according to the Illinois Department of Public Health.

“We’re very sensitive to our charges,” Seybold said. “Clearly, we want to be transparent. We want to make sure while we cover costs, that charges are not outrageous. This is an affirmation that we’re doing that.”

OSF Saint Anthony Medical Center typically falls in the middle of the pack for least- and most-expensive prices compared to the other hospitals. And the hospital is often paid less for the same services. CFO David Stenerson concluded that Saint Anthony offers the best value for care.

Stenerson said he doesn’t think the Medicare data are very helpful for consumers, for the same reasons noted by the other health systems.

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“Understand that health care is a different service and commodity than buying a sweater at Nordstrom versus Walmart,” Stenerson said. “Health care is a very personal decision, a very personal need. The hope is that people would spend a lot of time understanding the benefit of their insurance and interrelating that to care they genuinely need and providers they want to work with.

“Buying health care purely on price, I don’t think, is the best way to go.”